Average house prices across the UK were up 5.4% in October on the same month in 2019 following a 0.9% seasonally adjusted rise in September. The year-on-year growth figure compares to the annual rise of 4.3% recorded in September.
The fastest rise was seen in Wales, where average prices are up 5.8% to £176,000, while prices in England are up 5.4% £262,000, Scotland up 6% to £163,000 and Northern Ireland up 2.4% to £143,000, according to the data.
The East Midlands, North West and Yorkshire and The Humber saw the joint highest annual growth in average house prices at 6.6%.
The dramatic increases follow the government’s introduction of a stamp duty holiday in July to stimulate the housing market during the covid-19 pandemic, allowing home buyers to save thousands of pounds if they buy their home before the holiday ends on 31 March 2021.
Reacting to the figures, Garrington Property Finders chief executive Jonathan Hopper said: “It’s not so much a suspension of disbelief as a suspension of economic logic.”
He added: “As the economy slows to a crawl and the number of people being made redundant spikes, the property market has hit the accelerator.
“Not even in the wildest days of the pre-Financial Crisis boom did price growth jump so far, so quickly.”
Hopper speculated that many buyers had been motivated by a desire for a “fundamental change” in their living situations after working from home during lockdown, rather than the stamp duty holiday.
Property seller Movewise chief executive Tom Scarborough agreed that the lockdown had shaken up the market, with prices of detached homes rising nearly three times faster than those of flats and maisonettes,
He said: “In the age of Covid-19, the much-loved location, location, location mantra is becoming much more nuanced.
“Since the pandemic struck, homeowners in all corners of the UK have had a fundamental rethink about what they want in a home and, overwhelmingly, the conclusion is more outdoor space and room for an office.”
But the ONS caveated that the method of processing of the data had changed because of the pandemic, with figures for new build property transactions in August and September in England and Wales also including those from the previous months.
It warned that the changes “might lead to larger revisions to published estimates than usual”.
And regardless of any potential flaws in the data, many experts expect a slow down in the new year as the end of the stamp duty holiday looms and the economic recession begins to bite. Gatehouse Bank chief commercial officer Paul Stockwell said January could mark a “turning point” in the boom, with Scarborough adding: ”the growing prospect of rising taxes and unemployment is likely to see average prices cool down.”
Article by Tom Lowe, Housing Today.